Intelligent contingent multi-sourcing model for resilient supply networks

• We develop an intelligent contingent multi-sourcing model when disruptions occur.
• We evaluate the performance of our model in terms of lost sale and total cost.
• We analyze the performance of our model under various costs and disruption rates.
• Our model performs at least equal to or better than single sourcing.
• Our model also outperforms constant multi-sourcing under specific conditions.

As the complexity and uncertainty of supply networks (SNs) increase, strategic management for resilient SNs becomes significant. An intelligent contingency plan, rather than a direct and constant back-up plan, is more suitable for flexible and effective management. In this research, we introduce a unique contingent multi-sourcing decision protocol for effective response when disruptions occur. It is called the Intelligent Contingent Sourcing (ICS) protocol. Unlike previous research, which has mostly considered the constant multi-sourcing1 among internal suppliers, our model is developed for contingent multi-sourcing by collaboration with external suppliers. (When both the supplier and buyer are managed/controlled by the same company, that supplier is considered an internal supplier; in case each supplier is independent in terms of buyers and is self-interested, such supplier is considered an external supplier). Such contingent multi-sourcing requires the theoretical analysis of each participant's economic aspect, because each external supplier is independent and thus self-interested. The ICS protocol forms a contingent collaborative coalition based on a distributed decision making process. To evaluate the performance of the ICS protocol, three sourcing models are compared: (1) Single sourcing, (2) Constant multi-sourcing, and (3) Contingent multi-sourcing by the ICS protocol. Statistical analysis reveals that, with statistical significance, the ICS protocol performs at least equal to or better than single sourcing, in terms of less lost sales and less total costs; ICS protocol also outperforms constant multi-sourcing under specific conditions (stated in the article).